The infrastructure arm of one of Canada’s leading public pension funds, OMERS, has raised its stake in Europe’s leading freight railcar lessor in a clear move to bolster its strong position in European transport infrastructure.

OMERS Infrastructure raised its stake in VTG from 27.5% to 33.3%, making it an equal partner with the Abu Dhabi Investment Authority (ADIA) and Global Infrastructure Partners (GIP). ADIA and GIP are acquiring stakes from Morgan Stanley Infrastructure Partners and Joachim Herz Stiftung (JHS) and are selling around 3% each to OMERS.

ADIA and GIP announced in June 2022 their joint acquisition of a 72.5% stake in VTG for an enterprise value of EUR7 billion (US$7.5 billion). This implies OMERS spent EUR420 million (US$450 million) on upping its stake, which will now be worth EUR2.3 billion (US$2.5 billion).

Khadem AlRemeithi, executive director of the infrastructure department at ADIA, said: “The growth of Europe’s rail freight market is backed by a modal shift to rail as a key enabler of the decarbonisation of supply chains. This investment in VTG aligns with our continued focus on pursuing infrastructure opportunities backed by strong energy transition-related tailwinds.”

Alastair Hall, Senior Managing Director and Head of Europe, OMERS Infrastructure, said: “We’re proud to increase OMERS stake in VTG and look forward to working with ADIA and GIP to support VTG’s continued growth and development. Germany continues to be a target market for us, and we are actively exploring other transport and logistics infrastructure investments across Europe.”

VTG is an international asset owner and rail logistics company with around 88,500 railcars, the biggest privately-owned fleet in Europe. In addition to VTG, OMERS Infrastructure has 11 investments in Europe. In Germany, it has stakes in autobahn operator Tank & Rast, Internet network provider Deutsche Glasfaser/Inexio, and medical diagnostics platform Amedes. It also possesses chunky assets in the UK (Associated British Ports, London City Airport and Thames Water), Swedish electricity distributor Ellevio, Czech pipeline operator Net4Gas, French internet network provider XPFibre, Europe-wide refined oil transporter Exolum, and the recently acquired stake (alongside APG) in Dutch energy transition platform Groendus.

The previous weighty deal in railcar leasing was the takeover of VTG rival Alpha Trains in January 2021 by Dutch public pension funds APG and PGGM. APG ramped up its stake in the European regional train lessor to 62% after acquiring a 20.9% slice from AMP Capital while Canadian public pension fund PSP Investments sold its stake to PGGM. The Dutch funds dominate the shareholding of the owner of more than 950 mostly electric trains and locomotives with a total value of more than EUR3 billion (US$3.2 billion) across 21 countries, giving them exposure to the clean energy transition in European rail.

Arjan Reinders, Head of Infrastructure at APG, said at the time that the acquisition was made due to projected growth of the rail passenger and freight markets in Europe, along with the ongoing liberalisation of the European market that is set to drive further investment in the rail sectors.

Related funds ADIA OMERS
Related tags Infrastructure Logistics